# Entrepreneur of the Week Gil Torielpost 4 Wednesday: Hello, Happy holiday and a Happy New Year to all readers of this פור
# Initiated week Age of Toriel
Post 4
Wednesday:
Greetings,
Merry and Happy Holidays to all this distinguished forum readers??
Wish us all good news??
And today:
What are the differences between buying a home-owned private property and a group investment:
??Ground floor house Single family
??Apartment complex Multi Family
What are the recognized expenses in maintaining a property in the United States
Calculate cash flow in a ground-floor house
Calculate flow in a condominium complex ROI, NOI / Cap Rate
Benefits of group investment versus individual investment in a privately owned land
Quite often I run into questions from investors which is better? Buy a private home directly owned by Tabu and / or invest in an apartment complex together with other investors under incorporation in LLC
So let's put some thought into thinking and first of all we will see the differences in investment types:
Individual Family Home Investment - Single Family Home
Ground floor house is Single Family Home And it has a single parcel that is One Parcel ID
The home can be purchased under the personal and private ownership of the investor and / or company LLC (Husband and wife, close friends, mutual acquaintance and more)
LLC- Limited Lability Company
A separate legal entity for which a tax ID is issued ON, This company is transparent for tax purposes and the person who pays the tax is the owners of the LLC
ON - Employer Identification Number, IRS Tax ID
Warranty Deed - Deed of sale indicating the buyer’s ownership record
If the LLC has more than one owner, it is customary to make a company policy stating the percentages of ownership of each investor and the exit / purchase conditions of the company owners.
This slang is called "Bambi" - Buy me / Buy You
Operating Agreement - Articles of Association
Benefits of Investing in Buying a Private Owned Land and / or Under LLC
??Private ownership without partners under one parcel
??The property generates passive income from rent
??Freedom to do what I like regularly
??Bank Leverage option available for up to 70% of property cost
??Direct work with the management company (can also be seen as a disadvantage)
??The increase in value goes to the property owners
??You can sell the house whenever you want without the decision of other partners
??An existing loan on the property can be refinanced according to the wishes of the property owners
??Build credit history in taking out your mortgage
??All current expenses for current tax purposes can be offset
??A sense of personal security - it's just me / my property - a real estate psychologist
??The house can be upgraded according to the owner's wishes
??You can decide the size of the house and the number of rooms to buy
??The property can be thoroughly improved as required
??You can contact the management company every year and check the option of raising your rent
??Real Estate Psychologist - Dinner on Friday, look what I bought it's just mine ..
??You can take some private assets and sometimes get a commercial loan for them
Disadvantages of investing in buying a privately owned land and / or under LLC
One property, 100% property, if the property is empty then 100% of our property does not work
Maintenance Expenses - Sometimes generate a monthly cash flow deficit
Older assets have high exposure to high maintenance expenses and financial loss
Removing a reluctant tenant - involves many costs and rent loss
Sometimes the property owners cannot get a loan due to their financial condition
Messing with the management company / insurance company / ongoing property payments, a headache?
Lack of financial liquidity when needed - sometimes it takes a long time to realize the property
In the case of a divorce, who buys who and who sell at a loss
When it rains "outside" during a crisis in the real estate market, everyone gets wet and the value of the property drops
Exposure to personal claim by tenants / private entities
If the property owner does not meet the mortgage payments then the bank may take the property
Exposure to an increase in fixed expenses and a decrease in revenue
What are the expenses / revenues of holding a land-linked home for investment:
Revenue - Monthly rent, late payment of tenants' monthly rent
Expenses - Structural insurance, annual property tax, management fees for the management company, annual maintenance, neighborhood committee, tenant finding fees, new tenant's staffing fee when a tenant changes, one month's non-occupancy
Net return - Net income after all expenses divided by equity invested before tax
Income:
Gross Annual / Monthly Rent Income (Late Fee)
expense:
Property Taxes
Insurance / Homeowner insurance
HOA - Homeowner association
Yearly maintenance
Management Fee
Vacancy
ROI - Return on Investments
ROI = Current Value of Investment - Cost of Investment
Cost of Investment
Cost of Investment
Benefits of Group Investment under LLC in Acquisition of Multi-Family Complex
This investment is very common for the purchase of apartment complexes such as Multi Family Complex
Definition of Multi-Family - A multi-family building or home has multiple units owned by one or more parties
Usually 4 or more apartments are defined as a commercial complex, this complex will be registered under only one parcel, ie in the professional jargon in our beautiful country it is defined as "Moshe"
What is a group investment - if it is a private group, it is allowed to be incorporated until 35 riders In accordance with the laws of the Securities and Exchange Commission. (I won't elaborate on that now because so many posts need it ..)
The company is incorporated under LLC Members And each person receives the percentages of ownership in the company in accordance with the amount raised, it is customary to produce neat policies, the operating agreement of the company, and of course LP / GP
GP - General Partnership
LP- Limited Partnership
All partnerships require more than one person, and each person is known as a "partner"
Usually GP members "navigate" and manage the LLC in accordance with a pre-written business strategy and strategy, they are also the ones who take the loan if the purchased property is leveraged. It is quite rare to buy a property in cash in a commercial complex, by the way the loans for the purchase of such properties are on better terms than for the purchase of a detached house. You can get up to 80% financing up to 30 years, usually the loans are for 10 years but are calculated according to a repayment schedule for 30 years, there are repayment penalties in the first 3 years usually structured by the number of years.
The loan can be taken only with interest payments, which increases current cash flow and / or principal and interest. In addition, every few months a regular update on the status of the group is made to all the members of the group, accounting reports, profit and loss for the entire group and apartment are issued. Dividends are distributed on a regular basis each quarter to all members of the group according to the income and expenses of the group.
Calculate the market value of an apartment complex as opposed to a land-linked house is determined by the discount rate used in the area of net income divided by fixed / variable expenses + annual financing expenses
NOI / Cap Rate
WHO WE ARE - Net Operating Income
Cap Rate - The capitalization rate (also known as cap rate) is used in the world of commercial real estate to indicate the rate of return that is expected to be generated on a real estate investment property.
Purchasing an existing asset that needs improvement and / or managed deficiency is recommended for investment in C assets
Commercial real estate investments in apartment complexes have several types of properties:
A, B, C-, C +, D
Quality properties are A and B and are considered stable and expensive and therefore the yields are generally low but the improvement component can be high. Institutional entities and giant corporations like to invest in these complexes to create an anchor and build on the long-term improvement component. These investments are considered solid.
Apartment complexes for an affordable population are C + -. There is usually the big money in terms of current returns and value creation after improvement and raising rent in a controlled manner.
Type D apartment complex is not recommended to buy and are in the fence Delete ..??
Business strategy in purchasing an apartment complex Multi Family Financial Strategy
Planning an investment budget, finding the right investment, purchasing, improving the apartments according to the region's standard. (No need to turn these apartments into a 5 star hotel room).
Raising rents in line with market prices. Stabilization of rent over time. Reducing current expenses. (You can also add drinking machines, ice machines, candy machines, gate at the entrance, charge for losing a sign for the gate, renting the covered parking lots as storage space, you can employ a full-time "landlord" in the office and create an option of ordering food for tenants, such as "Give a bite" app .. Laundry services, ironing, car washing, rental of parking spaces and more ..).
Once the revenue grows then the e WHO WE ARE Increased Then the value of the complex increases and then you can go back to the bank and repay the existing loan at current market value and extract the invested equity and invest it again. Interest rate, one of the wonders of financial wealth building.
I am a big proponent of buying, improving, long-term possession, improving, stabilizing rent and loan cycle to spend invested equity and reinvesting to increase the Equity And generating current income.
Smart long-term transaction planning will create a negative tax liability throughout the life of holding the apartment complex in the US and Israel from the moment of purchase.
In buying, improving and selling there are many partners. 6% of the gross selling price, brokerage commission, 25% -50% capital gains tax, 2% closing fee, 2% -4% buyer incentive, will collect about 35% of the profit at best.
Benefits of Group Investment:
Benefits of an investment fund:
??Fixed and stable monthly cash flow - An excellent investment option for those who are looking to generate a regular and high monthly cash flow with a relatively low risk and a wide risk spread, in addition to an increase in the value of their money even with a relatively low investment amount.
??Risk Execution - Current maintenance expenses are divided among all the apartments in the complex
??Full management - As part of the group, the group's managers provide full service in the maintenance of the property, ongoing work with the management company, property tax payments, insurance.
??Invest in a quiet mind Group investment removes from the buyer any hassle regarding asset management, construction and operating mechanism. Spreading the investment over a large number of assets also divides the risk to the investor and ensures a stable return over time and peace of mind.
??Economies of scale - A concentrated acquisition of assets enables benefits in the acquisition, benefits in the management and utilization of the benefits of diversifying the investment and a chance to finance additional activities that will enable the return to increase.
??Safe- Full ownership of the group's assets invests in the assets, the rights for each member of the buying group are personal. For the purpose of the buying group, a new LLC company has been established that is independent of any company, and the investors are registered in the group as having rights in the company.
??Flexibility in moving out of investment - Can be offered to group members / group managers / external investors / sell property.
??Bank Leverage Joint management and the chance to increase the return through financing. The Group Manager will have discretionary authority to finance additional assets. In the case of refinancing, the invested equity can be extracted and another investment made.
??Risk Execution - Current maintenance expenses are divided among all the apartments in the complex
??Full management - As part of the group, the group's managers provide full service in the maintenance of the property, ongoing work with the management company, property tax payments, insurance.
??Invest in a quiet mind Group investment removes from the buyer any hassle regarding asset management, construction and operating mechanism. Spreading the investment over a large number of assets also divides the risk to the investor and ensures a stable return over time and peace of mind.
??Economies of scale - A concentrated acquisition of assets enables benefits in the acquisition, benefits in the management and utilization of the benefits of diversifying the investment and a chance to finance additional activities that will enable the return to increase.
??Safe- Full ownership of the group's assets invests in the assets, the rights for each member of the buying group are personal. For the purpose of the buying group, a new LLC company has been established that is independent of any company, and the investors are registered in the group as having rights in the company.
??Flexibility in moving out of investment - Can be offered to group members / group managers / external investors / sell property.
??Bank Leverage Joint management and the chance to increase the return through financing. The Group Manager will have discretionary authority to finance additional assets. In the case of refinancing, the invested equity can be extracted and another investment made.
??Invest in full transparency and information - The group's activities are conducted with transparency and full information regarding assets, management, income, expenses, management fees and any other details.
??Profit sharing- The Group leases the assets and distributes the profits on an ongoing basis, which ensures a constant and stable cash flow.
??Significant tax savings- The leverage of assets can be recognized for financing expenses for tax purposes.
??Your money works for youAs part of the group investment, the investor's money works for him, over time and at high returns on the equity invested.
??Identity of interests - The group manager is rewarded from the group's assets and the increase in value in a way that creates an identity of interests with the investors.
??ongoing updates- Group Managers update quarterly Group members on the economic performance of the property by individual profit and loss statements.
Happy holiday to everyone
Hope I contributed some of my knowledge and experience in this abridged post
For retirement we were born at an early age
Remember "Genius is in the making"
Whoever sits on the fence when the train passes "burns" his buttocks
Long-term planning / strategy and so we move from financial freedom labs
??Sunlight disintegrates best of all
??Lack of complete information if any illnesses
??Get out of your comfort zone and get started
Can continue all day like this .. ????
Energies ……??????
Attaches 2 short videos:
Video for Multi Family apartment complex
Single Family Home Upgraded Home Video Upgrade
pleasant viewing??
What awaits us tomorrow:
The difference between a sophisticated investor and an average investor
What are the common mistakes that most "return" investors make?
What is the broad definition of real estate, what is the aggregate return, current return, increase in value, savings of the loan principal, leverages / loans, types of loans, legitimate tax planning, re-leverage, savings plan…
Pensionshaha ???? ♂️???? ️♂️???? ♂️???? ♂️(I.e.
There will be a fire in the crater ??
Passive Income…??
Be ready…
Best regards,
Age of Toriel????
Cheers????
— feeling happy.
Link to the original post on Facebook - Works on a desktop computer (To view the post must be members approved for the forum)
Good post, fun to read.
I like that in the post you give concepts in English with an explanation
Indeed a very interesting post and a pleasure to read and hear from Gil Turiel
Just champion! A pleasure to read !!
Your every post is getting more and more professional
A novel affair
Amazing✌ full of value will you be blessed ????
Another excellent post full of professional knowledge. Thank you
My age I have no words.
How much value.
What posts one invested
World Champion ????
You are amazing ????
A big hug
Merav Bar Asaf Bar
Just great!!!
Continues teaching.
Thanks.
Thank you so much, excellent post with lots of information, definitely adds great value, happy holiday
Artyom Rukavitsin
Hi Gil I sent you a message in private about which courses books, etc. you took .. I would love for you to answer
Super cannon!
What do you base a raise on?
How do you compare the rent of houses worth 200 compared to apartments in the multi?
It is not the same nor the same language
Gil, companies that today offer complexes as you described, who is the specialist in the market?
Ofir Bugana
Excellent post! Thanks for all the information!
Excellent post! But you did not mention the drawbacks of group investing in Multi. And some of the advantages that you have mentioned in Multi are benefits that depend on the senior partners of the LLC. Transparency, and the option to make the investment when you want, is sometimes nothing more than false advertising. Then it really got complicated. It is very important here to work with entrepreneurs who have a very reliable track record, so when things don't happen as in the original design, the original transparency and promises are kept.
A great post that gives knowledge and practical tools alongside rich personal experience. ????????????
Pleasure to read your posts… Not obvious. Thank you
One of the good posts I read.
Clear and professional!